TIDMPILR
RNS Number : 0983I
Pacific Industrial & Log REIT PLC
19 March 2018
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO
DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES
LAWS OR REGULATIONS.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY
SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT HAS BEEN ISSUED BY AND
IS THE SOLE RESPONSIBILITY OF THE COMPANY.
THE INFORMATION COMMUNICATED IN THIS ANNOUNCEMENT IS INSIDE
INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION
596/2014.
Pacific Industrial & Logistics REIT plc
("Pacific Industrial & Logistics", the "Company" or the
"Group")
Proposed GBP50 million placing to fund UK urban logistics
acquisitions
Opportunity to add high-quality assets to the Company's
portfolio
Change of name to Urban Logistics REIT plc
Pacific Industrial & Logistics, (AIM: PILR) announces a
proposed placing of new ordinary shares ("Ordinary Shares") to
raise gross proceeds of GBP50 million, (the "Placing") to fund the
acquisition of a pipeline of UK urban logistics assets with a gross
acquisition cost of GBP73.6 million (the "Acquisition").
Highlights
The Placing and Acquisition support the Company's strategy to
build a specialist portfolio of high-quality, last mile and
regional (sub-GBP10 million) single-let urban logistics assets in
the UK. Tenant demand in the Company's chosen sub-sector remains
strong as occupiers address the challenges of e-commerce, modern
logistics and evolving infrastructure demands.
-- Placing is being undertaken to acquire two portfolios and a
single asset totalling 16 urban logistics properties, in line with
the Company's investment policy
-- Target assets can be acquired within six months of the
capital being raised
-- Aggregate gross acquisition consideration of GBP73.6 million
(including estimated finance costs of GBP0.5 million), representing
a blended Net Initial Yield of 6.6%. Anticipated gearing level of
40% following the Placing and Acquisition consistent with the
Company's existing policy
-- Target pipeline capital value of GBP69 per sq.ft.,
substantially below the cost of replacement
-- Significant reversionary potential across the portfolio with
average rents of GBP4.87 per sq.ft. and a weighted average
unexpired lease term of 6.5 years
-- Based on the capital raising proceeding and completion of the
acquisitions, the Company is targeting a dividend yield and total
returns, once fully invested and on a full year basis, in line with
investment policy guidance in excess of 6% and 10% - 15%
respectively.
-- Wide-ranging asset management opportunities across the
portfolio, enabling enhanced value creation
-- Club financing deal expected with Santander as lead agent
(c.GBP76 million term facility)
Nigel Rich, Non-Executive Chairman, commented:
"The proposed Placing and Acquisition presents another
opportunity to add high-quality UK urban logistics assets to our
existing portfolio. With the scale we now have in the Company and
through our active asset management programme, there is significant
upward momentum in our rent roll and capital value.
"Urban logistics continue to outperform the wider real estate
sector and the Manager has a strong pipeline of investment
opportunities, all of which demonstrate strong fundamentals. Our
investment policy continues to focus on the smaller single-let
properties which businesses need to meet the challenges of modern
commercial and logistics patterns.
"We also intend to change the Company's name to "Urban Logistics
REIT plc", with the ticker symbol SHED. The Board believes this
change reflects the Company's focus and is consistent with its
investment and growth strategy."
Current trading
Further to the Company's trading update on 26 February 2018, the
Board reiterates its expectation that year-end earnings and
portfolio valuation to 31 March 2018 will be in line with market
expectations. The Company also expects to pay total dividends of
not less than 6.0p per Ordinary Share in respect of the financial
year to 31 March 2018.
Change of name
The Company intends to bring the change of name into effect
contemporaneously with the Admission of new Ordinary Shares.
The change of name will not affect any Shareholders' rights. New
issues of Ordinary Share certificates will be in the Company's new
name and existing Ordinary Share certificates will remain
valid.
Background to and reasons for the Placing
The Company was formed for the purposes of investing in
single-let last mile and regional logistics properties in the UK
with an average lot size of under GBP10 million, located in
established logistics zones, and display, inter alia, the potential
for rental growth and other asset management opportunities. The
Company aims to achieve a target minimum 6.0% dividend yield and
total returns between 10% and 15% per annum.
The Group has raised a total of c.GBP75 million of equity
capital since its IPO, deploying the net proceeds, together with
debt finance, in acquisitions worth in excess of GBP125 million at
an all-in average interest cost of 3.3% and 7.4% average Net
Initial Yield. The Company's portfolio features:
-- Valuation increase of 7.5%, (six months to September 2017)
and a 12.3% increase over purchase price since IPO
-- Weighted average unexpired lease term of 5.2 years
-- Average capital value of GBP71 per sq.ft. against more than
GBP130 per sq.ft. estimated replacement cost
Since its IPO and subsequent fundraisings, the Company's
highly-experienced Board and Management Team have implemented their
strategy, completing acquisitions of 28 assets that meet the
Company's investment criteria. The Management Team has established
a significant pipeline of potential transactions and new capital is
required to acquire identified asset opportunities. The Directors
believe that the Placing will have the following additional
benefits for Shareholders, enabling it to:
-- Continue diversifying its income and asset base by increasing
the number of tenants and properties within the portfolio upon the
capital being deployed
-- Gain additional momentum, positioning it as an attractive and
preferred counterparty for vendors
-- Increase its economies of scale and, since the Group's
current operational capabilities can manage a substantially larger
portfolio, reduce its total expense ratio, in turn contributing to
the Company's dividend-paying capacity
-- Diversify the Shareholder base by increasing the number of
Ordinary Shares in issue, thereby providing the potential for
additional liquidity
The Company's position in a compelling market environment
Supply of, and demand for, urban logistics assets combined with
the nature of investments create what the Directors believe to be a
compelling opportunity. The Directors believe the Company is the
only closed-ended quoted or listed company in the UK solely focused
on urban logistics.
Supply of urban logistics assets remains constrained:
-- Asset availability across the UK is over a third lower than
the peak post-recession in 2009 (119 million sq.ft.)
-- Development remains limited as occupiers shift to
purpose-built properties; land availability remains constrained;
and planning permissions are not supporting supply growth to meet
demand
-- Asset supply is focussed on second hand properties with new
and early marketed space contracting (CBRE Logistics Report H1
2017)
Changing economic dynamics drive growing demand:
-- For every GBP1 billion of new online retail sales, an
additional 1.125 million sq.ft. of new distribution space is
required. Based on current online retail growth forecasts, this
translates to an annual average incremental demand of c.4.5 million
sq.ft. (JPMorgan, June 2017)
-- Online retail accounted for more than a third of all lettings
during H1 2017 (more acquisitive than traditional retail)
-- Retailers and e-fulfilment supply chain businesses are
investing in new distribution capability as parcel deliveries
increase 18% year-on-year, an average 46 per household; and demand
for reverse logistics rises to handle the 27% of all online sales
that are returned (JPMorgan, June 2017)
-- A wide range of facilities are underpinning the sector's
transformation - notably multi-floor XXL warehouses and urban
logistics sites located in regions that are traditionally regarded
as secondary (CBRE UK H2 2016 Logistics)
Compelling market opportunities exist:
-- Targeting acquisition of quality income-producing assets at
30% to 70% of replacement cost
-- Acquisitions present attractive income, capital growth and
total return prospects. Investments can be made in the region of
6.0% to 7.5% Net Initial Yields, at affordable rents of GBP4.50 to
GBP5.50 per sq.ft. on an overall LTV in line with the Company's
35-40% target range
-- The Company's focus on smaller lot sizes of less than GBP10
million and under 250,000 sq.ft. avoids competition with
institutional investors for acquisitions, but tenant quality can be
maintained
-- Despite a structural shortage of lettable space in the
subsector, it remains an active and well-traded market and the
Directors expect GBP3 billion to GBP4 billion of assets to be
transacted in 2018, enabling the Company to be selective in its
acquisitions.
Pipeline overview
The Company is evaluating a range of potential acquisitions that
meet its investment objective and are in line with the Company's
investment policy. Within the opportunities currently being
considered, the Company has commenced initial due diligence and
surveys on two portfolios and a single asset of well-located urban
logistics assets that are available to acquire in separate
off-market transactions. The aggregate gross acquisition cost of
approximately GBP73.6 million reflects a blended Net Initial Yield
of 6.6%. The Directors believe there is significant potential to
grow rents and lengthen leases over the medium term. The portfolios
have strong existing tenant bases, are fully occupied, have a WAULT
of 6.5 years and offer attractive reversionary potential.
All information relating to the potential investments described
in this Announcement are indicative, subject to detailed due
diligence and may subsequently change as a result.
The acquisition of any potential investments by the Company is
subject to, among other things, completion of the Placing,
completion of satisfactory due diligence, successful negotiation of
terms with vendors and the approval of the Directors. There can be
no guarantee that any of the potential investments will be
completed, but the Company intends to complete the acquisition of
target assets within six months of capital being raised.
Borrowing and gearing policy
The Company will seek to use gearing to enhance returns over the
long-term and, in addition, will seek to fix its borrowing rates.
It is the Directors' current intention to target gearing of not
more than 40% and has a club financing agreement in principle with
Santander UK as lead agent.
M1 Agency Fees
At the point the Company acquires certain properties in the
pipeline portfolio, it will incur, on an arm's length basis,
certain commercial agency fees from M1 Agency LLP. M1 Agency LLP is
a partnership in which Richard Moffitt is a designated member. The
payment of fees by the Company to M1 Agency LLP will, at the time,
be related party transaction for the purposes of the AIM Rules.
To the extent that the related party transactions take place,
Canaccord Genuity has determined they would be fair and
reasonable.
Details of the Placing
The Company is proposing to raise gross proceeds of GBP50
million by way of the Placing which will be conditional upon, inter
alia, approval by Shareholders.
The Ordinary Shares to be issued pursuant to the Placing will
rank pari passu with the Company's existing Ordinary Share capital
by reference to a record date on or after the date of
Admission.
It is expected that details of the Placing including, inter
alia, final size, pricing and the expected timetable of principal
events will be announced on or before 29 March 2018.
Canaccord Genuity is sole Bookrunner for the Placing, with
Radnor Capital and Kinmont Advisory acting as Placing Agents.
Appendix - portfolio as at 31 December 2017
Tenant Location Acq. Acq. Net Size
month cost* book
value
GBP'000s GBP'000s sq.ft.
------------------- ----------------------- -------- --------- --------- ----------
Price's Patent 16 Hudson Road, Apr
Candles Bedford 16 2,200 2,390 44,195
Jas Bowman 18 Edison Road, Apr
& Sons Bedford 16 2,675 3,325 39,306
104-106 Riverside Apr
The BSS Group Way, Northampton 16 750 900 13,633
Caxton Road,
Elm Farm Industrial Apr
ACO Technologies Estate, Bedford 16 1,675 3,025 41,603
Blackburns Edison Road, Apr
Metals Bedford 16 1,250 1,750 24,380
Prima Foam House,
Caxton Road, Apr
Ball and Young Bedford 16 1,100 1,650 22,535
Regent House, Apr
Ideal Industries Bedford 16 2,850 2,300 42,392
Marshall Thermo Unit 11-14 Cemetry Apr
King Road, Dunstable 16 600 900 9,912
Unit 73 Interlink
Way, Interlink
Business Park, Apr
Winit Corporation Bardon 16 6,000 6,350 73,791
Units B Postley Apr
Void Road, Bedford 16 1,393 1,629 21,137
Professional
Fulfilment Units A Postley Apr
Services Road, Bedford 16 1,394 1,631 21,162
Units C-D Postley Apr
Arqadia Limited Road, Bedford 16 2,813 3,290 42,700
National Distribution
Centre, Park
Road, Holmewood, Jan
Void Chesterfield 17 4,659 5,800 108,873
PUMA UK & Bruntcliffe Way, Mar
New Day Leeds 17 6,050 6,250 63,979
Plot 2000 Haverhill
HID Corporation Business Park, Sep
Ltd Haverhill 17 4,090 4,300 37,355
Plot 5000 Haverhill
Culina Logistics Business Park, Sep
Ltd Haverhill 17 14,150 14,900 194,965
XPO Transport
Solutions Hope Carr Lane, Sep
UK Ltd Leigh 17 3,340 3,340 39,720
XPO Transport
Solutions Legbrannock Road, Sep
UK Ltd Motherwell 17 2,420 2,560 100,832
Townsend Drive,
Nuneaton LE10 Sep
Void 3BZ 17 6,710 6,710 130,508
XPO Supply Dodwells Road, Sep
Chain UK Limited Hinckley 17 3,280 3,280 62,082
XPO Transport
Solutions Pontefract Road, Sep
UK Ltd Normanton 17 6,110 6,110 94,102
Unit A Belcon
J Sainsburys Industrial Estate, Sep
Plc Hoddesdon 17 3,950 4,030 45,018
Travis Perkins Unit B Belcon
(Properties) Industrial Estate, Sep
Ltd Hoddesdon 17 1,480 1,540 10,935
Unit 3003 Victoria
Road, Leeds LS14 Nov
Pharmacy 2U 2LA 17 1,337 1,337 19,130
Unit 3001 Victoria
Road, Leeds LS14 Nov
Komori 2LA 17 1,558 1,558 22,290
Sandfield Close,
Moulton Park, Dec
Panther Northampton 17 3,025 3,025 42,553
DHL Supply 1A Alston Road, Dec
Chain Norwich 17 2,176 2,176 31,410
DHL Supply Dec
Chain Aston Lane, Runcorn 17 8,083 8,083 122,478
Imperial House, Dec
GoCompare.com Newport 17 4,644 4,644 26,672
Leigh Commerce Dec
Void Park, Leigh 17 7,154 7,154 110,729
DHL Supply Wagonway Road, Dec
Chain Hebburn 17 3,157 3,157 77,430
Manitowoc Radclive Road, Dec
Crane Group Buckingham 17 6,286 6,286 29,378
--------- --------- ----------
118,359 125,380 1,767,184
--------- --------- ----------
* excluding purchaser costs
For further information contact:
Pacific Industrial & Logistics
REIT plc
Richard Moffitt +44 (0)20 7591 1600
Montfort - Financial PR and
IR adviser
Nick Miles
Olly Scott +44 (0)78 1234 5205
Canaccord Genuity - Nominated
Adviser, Joint Financial
Adviser and Sole Bookrunner
Corporate Broking
Simon Bridges
Charlie Foster
Andrew Buchanan
ECM
Sam Lucas
Ben Griffiths +44 (0)20 7523 8000
Notes to Editors
About Pacific Industrial & Logistics REIT
Pacific Industrial & Logistics REIT plc is a property
investment company, quoted on the AIM market of the London Stock
Exchange, (AIM: PILR).
The Company has been established to invest in UK based
industrial and logistics properties with the objective of
generating attractive dividends and capital returns for its
Shareholders. Its investment strategy focuses on strategically
located smaller single let industrial and logistics properties
servicing high-quality tenants. Investment returns will be
generated by an experienced management team focusing on quality
stock selection and active asset management.
A number of structural and commercial factors currently support
the attractive opportunity in the last mile/regional industrial and
logistics real estate sub-sectors targeted by the Company,
including: strong occupier demand, (driven by the growth of
e-commerce and investment by retailers in their associated supply
chain) and a decline in the supply of lettable space in industrial
and logistics real estate across the UK (being more than one third
lower than the most recent peak of 2009).
Acquisitions are targeted in the 6.0% to 7.5% Net Initial Yield
bracket, (with affordable underlying rents in the region of GBP4.50
to GBP5.50 per sq ft.), on an overall LTV of 35% to 40% and a
significant margin over financing costs, thus presenting attractive
income, capital growth and total return opportunities.
DEFINITIONS
The following definitions apply throughout this Announcement,
unless the context requires otherwise:
Admission the admission of new Ordinary Shares
issued in connection with the Placing
to trading on the AIM market of the
London Stock Exchange
Board the board of directors of the Company
Company Pacific Industrial & Logistics REIT
plc
IPO the admission of the entire issued
and to be issued Ordinary Share capital
of the Company to trading on the AIM
market of the London Stock Exchange,
which took place on 13 April 2016
LTV the ratio of gross debt less cash,
short-term deposits and liquid investments
to the aggregate value of properties
and investments
Manager Pacific Capital Partners Limited,
a company registered in England and
Wales with company number 02849777,
the manager to the Company. The principal
members of the management team are
Richard Moffitt and Christopher Turner
Net Initial annualised current passing rent less
Yield non-recoverable property expenses
such as empty rates, divided by the
property valuation plus notional purchasers'
costs
Ordinary ordinary shares of GBP0.01 each in
Shares the capital of the Company
Placing the placing of new Ordinary Shares,
as more particularly described in
this Announcement
Shareholders holders of Ordinary Shares
WAULT the average lease term remaining to
first break, or expiry, across the
portfolio weighted by contracted rental
income (including rent-frees). The
calculation excludes residential leases
and properties allocated as developments
IMPORTANT NOTICE
The contents of this Announcement, which have been prepared and
issued by, and are the sole responsibility of the Company, have
been approved by the Manager solely for the purposes of section
21(2)(b) of the Financial Services and Markets Act 2000
("FSMA").
The information contained in this Announcement is for
information purposes only and does not purport to be full or
complete. No reliance may be placed for any purpose on the
information contained in this Announcement or its accuracy,
fairness or completeness.
This Announcement is directed only at persons in the United
Kingdom who: (a) are Professional Investors (within the meaning of
the Alternative Investment Fund Managers Directive (2011/61/EU))
(b) have professional experience in matters relating to investments
falling within article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 (the "Order"); (c) fall
within article 49(2)(a) to (d) (high net worth companies,
unincorporated associations, etc) of the Order; or (d) are persons
to whom it may otherwise be lawfully communicated.
This Announcement has been issued by, and is the sole
responsibility of, the Company. No undertaking, representation,
warranty or other assurance, express or implied, is made or given
by or on behalf of the Company or any member of the Company's
group, Pacific Investments Management Limited, Canaccord Genuity
Limited ("Canaccord"), Kinmont Limited ("Kinmont") or Radnor
Capital Partners Ltd ("Radnor") or any of their respective
directors, officers, partners, employees, agents or advisers or any
other person as to the accuracy or completeness of the information
or opinions contained in this Announcement and no responsibility or
liability is accepted by any of them for any such information or
opinions or for any errors, omissions or misstatements, negligence
or otherwise in this Announcement.
Canaccord which is a member of the London Stock Exchange, is
authorised and regulated in the UK by the Financial Conduct
Authority ("FCA") and is acting as nominated adviser, joint
financial adviser and sole bookrunner to the Company. Canaccord is
not acting for, and will not be responsible to, any person other
than the Company for providing the protections afforded to its
customers or for advising any other person on the contents of this
Announcement or on any transaction or arrangement referred to in
this Announcement. Canaccord's responsibilities as the Company's
nominated adviser under the AIM Rules are owed solely to the London
Stock Exchange and are not owed to the Company, any Director or to
any other person. No representation or warranty, express or
implied, is made by Canaccord as to, and no liability is accepted
by Canaccord in respect of, any of the contents of this
Announcement.
Kinmont, is authorised and regulated in the UK by the FCA and is
acting as joint financial adviser to the Company. Kinmont is not
acting for, and will not be responsible to, any person other than
the Company for providing the protections afforded to its customers
or for advising any other person on the contents of this
Announcement or on any transaction or arrangement referred to in
this Announcement. No representation or warranty, express or
implied, is made by Kinmont as to, and no liability is accepted by
Kinmont in respect of, any of the contents of this
Announcement.
Radnor, is authorised and regulated in the UK by the FCA and is
acting as capital adviser and placing agent to the Company. Radnor
is not acting for, and will not be responsible to, any person other
than the Company for providing the protections afforded to its
customers or for advising any other person on the contents of this
Announcement or on any transaction or arrangement referred to in
this Announcement. No representation or warranty, express or
implied, is made by Radnor as to, and no liability is accepted by
Radnor in respect of, any of the contents of this Announcement.
The information in this Announcement may not be forwarded or
distributed to any other person and may not be reproduced in any
manner whatsoever. Any forwarding, distribution, reproduction, or
disclosure of this information in whole or in part is unauthorised.
Failure to comply with this directive may result in a violation of
applicable securities laws and regulations of other
jurisdictions.
This Announcement contains (or may contain) certain
forward-looking statements with respect to certain of the Company's
current expectations and projections about future events and the
Company's future financial condition and performance. These
statements, which sometimes use words such as "aim", "anticipate",
"believe", "may", "will", "should", "intend", "plan", "assume",
"estimate", "expect' (or the negative thereof) and words of similar
meaning, reflect the Directors' current beliefs and expectations
and involve known and unknown risks, uncertainties and assumptions,
many of which are outside the Company's control and difficult to
predict, that could cause actual results and performance to differ
materially from any expected future results or performance
expressed or implied by the forward-looking statement. The
information contained in this Announcement speaks only as of the
date of this Announcement and is subject to change without notice
and the Company does not assume any responsibility or obligation
to, and does not intend to, update or revise publicly or review any
of the information contained to this Announcement, whether as a
result of new information, future events or otherwise, except to
the extent required by the UK Financial Conduct Authority, the
London Stock Exchange Plc or by applicable law.
The targeted annualised net dividend and annual total return set
out in this Announcement are targets only and not profit forecasts
and there can be no assurance that they will be met or that any
dividend, rental growth or capital growth will be achieved.
The acquisition of any potential investments by the Company is
subject, among other things, to the Company completing satisfactory
due diligence, successful negotiation of terms with vendors and the
approval of the Directors. There can be no guarantee that any of
the potential investments described in this Announcement will be
completed. All information relating to the potential investments
described in this Announcement are indicative, subject to detailed
due diligence and may subsequently change as a result.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEEAKDNFSSPEEF
(END) Dow Jones Newswires
March 19, 2018 03:01 ET (07:01 GMT)
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